The Compensation Fund is more than an obligatory payment for South African employers. It is a beneficial tool, when used correctly, significantly contributes to the financial stability and operational efficiency of businesses in our country.
By navigating through the nuances of the Compensation Fund and Return of Earnings, employers can adopt a proactive approach.
Research has proven happy employees are productive employees. When employees feel safe in their workplace productivity improves. There are steps employers can cover to protect employees and create an employee-centric approach.
YC Consulting, is a black female owned business (BBBEE) with years of experience in Return of Earnings and Compensation fund. If you need assistance with any aspect of filing your Return of Earnings you can reach Jyoti Singh at info@ycconsulting.co.za.
How much does the Compensation Fund Pay?
The Compensation Fund reimburses employees 75% of the income disparity between their current earnings and what they would have earned prior to the injury. Additionally, the fund covers all medical costs, provided that the medical bills are submitted to the Commissioner.
Employees can claim for temporary disability from COIDA for a period of up to one year.
What are Earnings Threshold?
Every year the Compensation Fund sets a ceiling or a limit on how much of an employee’s salary the employer can use towards their Occupational Injuries and Diseases Contributions.
This means, no matter how much an employee earns over this set limit, the contribution calculation will only consider up to this maximum amount. The specific number for this threshold changes each year.
In the following examples, suppose the annual threshold is set at R R484 200. We present two scenarios to calculate the earning threshold.
Scenario 1
If the employee earns a monthly salary of R25 000 the annual income reported on the Return of Earnings would be R300 000 (R25 000 multiplied by 12 months).
This amount, R300 000, is within the annual threshold limit, and therefore, it will be fully considered for the Return of Earnings calculation.
Scenario 2
If the employee’s monthly salary is R25 000, with a bonus in December of R25 000, the employer calculates the annual Return of Earnings as follows:
R25 000 salary for 11 months equals R275 000.
In December, the salary plus the bonus totals R50 000.
Therefore, the total annual earnings reported would be R325 000 (R275 000 from the salary for 11 months plus R50 000 for December).
Are there Penalties to Late Submission of Return of Earnings?
Submission of the annual Return of Earnings to the Compensation Fund opens from 1 April ’24 to 31 May ’24. Employers submitting the Return of Earnings (W.As.8 form) after the deadline are charged a 10% penalty fee. The Department of Labour will further charge interest on any accounts paid 30 days after the invoice date and any overdue accounts.
Employers should notify the Compensation Fund of any changes in employee’s details, including the closure of the business, any alterations in the business type, a new physical address, a change in the business’s email address, and other contact information.
Businesses should report these changes within 7 days of their occurrence.
